Tuesday, Oct 09, 2007
Woolwich to be next sub-prime casualty?
Firstrung: Woolwich announces confidence in buy to let mortgage market
Perhaps buoyed on by the bail-out of Northern Rock, the Woolwich has announced that it is relaxing its lending criteria on BTL (aka sub-prime) mortgages. Key features of their new "product" ..... (1) Rental cover to reduce from 125% of mortgage payment (2) Proof of income not required on loans upto 500k (3) 75% loan-to-value (which suggests they are factoring a 25% price crash), (4) remove requirement for minimum income of £20,000. Sub-prime, sub-prime, sub-prime .....
Posted by uncle chris @ 08:41 PM (1202 views) Add Comment
25 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. uncle chris said...
Oooops - part (1) should read ....
"Rental cover to reduce from 125% to 105% of mortgage interest payment"
2. tyrellcorporation said...
Moral-Hazard-tastic! The BoEs actions give wreckless lending the big green light of joy! GO FOR IT GUYS, FILL YOUR BOOTS!!!
3. trough2010 said...
you may want to sign my 10 downing street petition which i submitted on 20 sep 2007 in the midst of the crisis. i think i even beat the telegraph with the word 'nationalisation' (in the context of northern rock bail out c.f. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/21/cnnrock121.xml). I'm still the only signatory, perhaps because i have not bothered promoting the link. take a look if you have time: http://petitions.pm.gov.uk/BoEindependence
4. Music Man said...
interesting lol...
5. down wave said...
My eldest daughter is a great economic expert, She has told me that this web site is full of people that have a particular mind set and limited in their thinking? Tunnel realities, can you broaden them?
6. lvmreader said...
http://en.wikipedia.org/wiki/Asian_financial_crisis
Many economists believe that the Asian crisis was created not by market psychology or technology, but by policies that distorted incentives within the lender-borrower relationship. The resulting large quantities of credit that became available generated a highly-leveraged economic climate, and pushed up asset prices to an unsustainable level [3]. These asset prices eventually began to collapse, causing individuals and companies to default on debt obligations. The resulting panic among lenders led to a large withdrawal of credit from the crisis countries, causing a credit crunch and further bankruptcies. In addition, as investors attempted to withdraw their money, the exchange market was flooded with the currencies of the crisis countries, putting depreciative pressure on their exchange rates. In order to prevent a collapse of the currency values, these countries' governments were forced to raise domestic interest rates to exceedingly high levels (to help diminish the flight of capital by making lending to that country relatively more attractive to investors) and to intervene in the exchange market, buying up any excess domestic currency at the fixed exchange rate with foreign reserves. Neither of these policy responses could be sustained for long. Very high interest rates, which can be extremely damaging to an economy that is relatively healthy, wreaked further havoc on economies in an already fragile state, while the central banks were hemorrhaging foreign reserves, of which they had finite amounts. When it became clear that the tide of capital fleeing these countries was not to be stopped, the authorities ceased defending their fixed exchange rates and allowed their currencies to float. The resulting depreciated value of those currencies meant that foreign currency-denominated liabilities grew substantially in domestic-currency terms, causing more bankruptcies and further deepening the crisis.
7. planning4acrash said...
Downwave, I personally couldn't give a cr$p about your daughter's opinion just because her father think's she's excellent, my mum thinks I'm awesome, does that make an amazing person? It may be interesting if you paraphrase the specific points she objects to and what counter ideas "she" may or may not have (if indeed she exists). Without such that, I am led to believe that your daughter has a portfolio of buy to let properties, is too young to remember 1992 and too engrossed in contemporary monetary theory to recognise its failure to put enough emphasis on secular cycles.
8. autopilotengage said...
My son is 2 and has recently started speaking. His favorite word at the moment is "plop". Do i have the right forum?
9. wiltshire said...
Down wave, your daughter may be right that people here have a particular mind set and limited thinking. However, that doesn't mean the people here are wrong or misguided, they may well be spot on in their analysis.
Don't forget, a month ago Northern Rock suddenly appeared on the radar. Now that as far as I am concerned is a gentle wake-up call that a) everything is not rosy in the garden as the VI's (be it governmental, EA, whoever) would have us believe and b) we are in a new age (the information age) and moving forward we are going to see more 'historic' events within the financial world because the world has shrunk so much in the last 15 years.
I've been visiting this site for about 18-24 months and in that time I have seen more and more of the predictions made by some of the established (and in my opinion, knowledgeable and intuitive) posters coming true. If you're asking can we broaden your daughter's mindset, I doubt it. I think she'll only understand when more and more events (such as Northern Rock and worse) occur which can't be casually disregarded.
10. nacho99 said...
Downwave, I believe house prices are over valued and will go through a correction.
Please feel free to discuss the topic.
11. enuii said...
The problem with BTL is its viewed by many as a) a get rich quick scheme, b) a pension pot, c) a sound bricks 'n' mortar 'investment'.
The sad truth is they are robbing the next generation of affordable homes and their pension prospects.
12. Safeazowziz said...
I think the 'investors' who have just bought 3 flats off me for 625K and promptly grossed them up to 730K have a particular mind set andare limite in their thinking :)
13. autopilotengage said...
Guess you don't need to be a building society or former building society to lend recklessly but it sure appears to help. At least BTL isn't just for the rich anymore, your friendly local building society will help even the less fortunate shaft the next generation. When it does all go wrong, now there's even less chance or a redress of the divide between the rich and the poor. 5M property portfolio without even needing to earn 20K a year, what a land of opportunity we live in.
14. Exiled said...
is dw for real of course this website has a fixed mindset they wont to see a house price crash this guy is obviously incapable of forming his own opinion. this government says it wonts to release green land for housing development, the gov knows there is no housing shortage they are desperate to avoid a house price crash which would exit them from government for a long long time hence they will do anything to keep crazy house prices moving in a upward direction.
15. Frogger said...
Dear Down Wave's daughter,
At the moment I'm a potential FTB and over the next year I would like
i) a delightful (and long overdue) house price correction of at least 40%,
ii) stamp duty abolished for FTB's (or for houses <£200k)
iii) interest rates to rise above 15%
iv) BTL landlords to lose all their tax benefits
v) council tax to be raised to 150% on all second homes
vi) immigration to be abolished and emigration to be made compulsory
vii) landowners to be taxed on all building plots for which planning permission has been granted
viii) a complete ban on foreign ownership of UK property
ix) a house building scheme of 6m new homes a year
After I buy my house I may decide to change my views.
16. whiteknight said...
"Moral-Hazard-tastic! The BoEs actions give wreckless lending the big green light of joy! GO FOR IT GUYS, FILL YOUR BOOTS!!!"
Absolutely correct. Infact the problem here now will be that it wont be long before the next little problem errupts and then even for somebody with a very short memory the dots will be able to be directly connected as to who did what and when.
17. taffee said...
down wave this site is called housepricecrash in what respect does your economic expert daughter expect us to not have tunnel vision?
I guess she's the one who cannot afford to buy a house and stays at home then
18. down wave said...
Yes, I posted this to draw attention to my earlier postings. I am glad that at long last I have received some coments from you. My daughter is real she sold up some time back and has banked the money spreading it thinly among banks. I enjoy all of your comments. I visit this site several times each day. I am happy that you took the bait, thank you all for your posts. I predicted black Wendnesday and convert to german marks, advised the tory goverment then via my local MP Toby Jessel, I also advised him about the comming housing crash of the 90's. He telphoned me on each occasion and was not a happy man.
I have posted many important topics hear and all of them have gone over the top of your heads as none of you commented.
19. down wave said...
By the way, she did not put any of here money that she got when she sold up and rented into Northern Rock, Halifax, Bradford & Bingley or Alied an Lecester. The HPC is on us and it is time to run for the hills.
20. Another Alan said...
Is post 14 attention seeking?
21. cyril said...
@down wave - You are indeed a very clever and important person. Pehaps your daughter will win a nobel prize. What is your point?
22. taffee said...
I recently advised crash gordon not to call an election and to save as much of his monthly income as possible.
23. Flintster said...
Dave Wave- Are you trying to tell us that you consider your self to be a profit?
24. Flintster said...
Sorry, Down Wave
25. inbreda said...
Thankyou for gracing us with your presence downwave.
And thanks for assuming that all of your previous comments went directly over my head. You are of course absolutely right - I am thick as pigsh*t, and couldn't possibly understand one of your clever, if somewhat subtle, arguments.
So far off the mark am I that I daren't even bother trying to ascend to your level of understanding.